What is a POS system?
A point of sale (POS) system is a integrated software and hardware solution for retailers to manage sales. POS systems replace cash registers Conventional when handling transactions, POS systems can also:
- Process all kinds of payments
- Tracking Inventory
- Manage your accounting needs
- Calculate sales tax
- Track employee work hours, vacation time, and absences
- Manage payroll
- Manage loyalty programs
- Track sales history
- Calculate prices and discounts
How does a POS system work?
A POS system is made up of 2 main parts: the hardware, such as a printer, a cash drawer, and a POS terminal, and the software, which is the computer program that operates the entire system. A POS system works by connecting your credit card processing applications, accounting applications, inventory applications, and other point of sale related business applications in a single unit.
The types of POS software and their costs
There are 4 main types of POS software:
1. Mobile point of sale software
This software is cloud-based and comes as an application on your smartphone or tablet. It is generally compatible with a receipt printer and a credit card, but it is not as powerful as a full terminal POS system. It is ideal for sole traders such as plumbers or mobile food cart owners.
2. Tablet POS software
The tablet version is similar to mobile POS software, but offers more features and capabilities. You can use tablet POS software to manage a large and complex retail organization, including inventory tracking, employee time tracking, payroll, and accounting. They are compatible with many POS hardware solutions to form a complete POS system for any situation.
3. POS terminal software
This is a fixed POS software with full back-office capabilities. It can be cloud-based or on-premises. Terminal POS software is best suited for large retail stores, spas, shopping malls, and other brick and mortar businesses.
4. Self-service or unattended POS software
It is designed for use in kiosks and outdoor units where it is not practical to post an employee. Often integrates with another nearby POS system, such as providing a point of sale extra in a busy grocery store. It can be cloud-based or on-premises, as it is not used with a mobile system.
You will also find POS software designed for the unique needs of specific industries, such as restaurants and hospitality, clothing sales, financial services, academia and education, and pharmaceutical POS software.
The costs of your POS software will vary depending on the type of software you choose. Mobile POS software, like a smartphone app, can start at $ 50 per month, while more complex software can run into several hundred dollars a month. When you purchase POS software, you will generally have to pay an initial purchase price, plus an ongoing monthly or annual payment processing fee.
Other factors that can affect the cost of your POS software include:
- How many functions does it add
- Any hardware included
- Number of integrations
- Your operating system
Obtaining the correct POS hardware
POS hardware is the other indispensable half of your POS system. You will need to get the right hardware to match the actions and transactions you want to carry out using your POS system. A basic set of POS hardware consists of:
- Printer to offer hard copies of receipts (retail stores are likely to restaurants and other physical companies need this)
- A POS terminal or iPad or Android tablet to run your POS software
- Credit card reader
- A cash drawer to keep cash transactions secure and connected to your system
Depending on your business, you may also need:
- Additional tablets for staff to process orders at the table of the restaurants.
- A router to strengthen your Internet for cloud-based POS systems
- A local server to host your local point of sale software
- Food Retail Balances
- Barcode scanners
- Network cables to connect all your hardware
- A printer kitchen extra
- Self-service payment kiosks
The benefits of a POS system for your business
With a POS system, your business can retain more customers through a better and targeted loyalty program, and you can also track inventory so you never unexpectedly run out of stock. A POS system can help you execute complex discount offers when appropriate.
With the correct POS system, you can also analyze your sales history to discover seasonal shopping trends and correlations, which can be helpful when you want to increase sales. You can also eliminate manual error through the use of barcode scanners and automatic synchronization, as well as combat absenteeism with a more reliable employee tracking system.
Other important benefits include improved payment security, as well as the ability to make more sales thanks to your ability to accept more types of payment.
Cloud-based point of sale systems versus on-premises
A cloud-based POS system stores data on remote servers and can be accessed online, while a traditional or local POS system stores data on a local server and can be accessed through an internal network. Here is a breakdown of the main differences between a cloud-based POS and an on-premises POS:
|Cloud-based POS systems||POS systems on site|
|Relatively low cost to buy and set up, but they have costs higher continuous||It is expensive to install and install, but it involves costs continuous very low|
|Always accessible from anywhere, even if you are outside the country.||Complete and extensive. Local point of sale systems can be used for very large and complex retail situations|
|Highly scalable||It is not easily flexible or scalable|
|Easy to carry, making them ideal for mobile businesses||It is not easy to transport, making it a poor choice for mobile companies|
|Depends on a good internet connection||It does not depend on Internet, so your POS system is always running, even if the internet is idle|
|Able to keep your data backed up in the cloud so you don't lose anything if the system crashes||At risk of losing all your data if the server fails|
|Easy to integrate with other business applications.||Operated on a local server with all your data and applications on your own network|
If you have long-term business plans and your requirements are likely to continue to evolve as your business grows, then a cloud-based POS system is probably the best option for you. On the other hand, if you have fixed needs or a small budget, it is better to choose a traditional POS system.
How to choose a POS system provider
Asking yourself these questions will help you choose the supplier of correct POS system:
- What features do I need?
- Do I want to save money up front or keep my costs monthly?
- What hardware do I need? If you need a lot of items, a better option is a vendor that includes hardware along with the software, but if you are going to use your existing iPad, you will need something different.
- Does it integrate well with my existing business applications?
- Is the price transparent?
- Is it easy to set up and use? If more complex, do you offer training?
- What Insights offers and what metrics can you check? Make sure the ones most important to you are included in the package.
- How good is the customer service?
- Is it easy to expand as your business grows?